AI is undoubtedly experiencing a boom in investment, with firms and markets across the world closely looking at how the technology can improve processes, introduce efficiencies and drive business’s bottom line.
We spoke with our head of product at Midwinter, Andrew Zietara (pictured below), to discuss how AI is currently being used in the wealth and advice markets in Australia and how this could be relevant to financial advisers in the UK.
How is AI being used now in wealth management? What are the benefits (and limitations) of AI to adviser business practices?
Andrew Zietara (AZ): “AI is already being used in a range of different ways in the wealth management space, but it’s still early days and not many advice firms have embedded it into their businesses.
“There’s a huge opportunity for AI to assist with business practices. Currently these benefits tend to focus on creating efficiencies in day-to-day processes and helping advisers to improve and speed up their ability to serve and onboard customers.
“If AI is going to fulfil its potential, it will have to surpass some of its limitations. For example, AI in its current form doesn’t really enhance core planning in any material way yet, and crucially, it can still make mistakes which can cause serious issues in tightly regulated markets.”
How will the role of regulation impact the update / results of AI in financial services?
AZ: “Creating effective regulation is key to unlocking future innovation and encourage more widespread adoption of AI, particularly in terms of advice.
“Under Australian law you have to be able to reverse engineer your processes to clearly demonstrate how you have arrived at a particular answer when offering digital advice.
“The problem with AI is that, by its very nature, it is a closed system which is capable of learning from itself so there’s no obvious audit trail to show the regulator. That’s one key regulatory issue we will have to solve if AI is going to increase in use, scope and scale.
“Reassuringly, we are starting to see progress in this area. In Australia, there’s talk of regulators potentially adopting a sandbox approach to allow firms to innovate outside of regulation in a controlled way, and we could see genuine learnings come from that. But, again, it’s still very early days.”
What is the future for AI and how does it fit with digital advice?
AZ: “We’re extremely optimistic about AI. There’s no doubt it will be truly transformative and it will change the way we all live and work – including the way advisers do business.
“There is absolutely a future for AI within digital advice and this could be hugely beneficial to tackling things like the advice gap in Australia, which is a big talking point in the UK too.
“AI will play a very active role in the future of digital advice in terms of client engagement and asking clarifying questions in a natural, conversational way. AI is far better at dealing with ambiguity than traditional algorithms so there’s certainly space for it to add more value to savers.”
Will AI ever be used as a primary source, or will it be limited to providing additional support services – is the Financial Services landscape ready to embrace AI in 2024?
AZ: “It will get there, there is no doubt. When is anyone’s guess, but a key factor will depend on regulatory acceptance. Such as the pace of change around AI, I believe the regulation will ultimately need to catch-up with the speed of innovation and that is something that has happened historically, particularly in terms of digital advice.
“As things stand, AI is limited to support services – like helpdesk enquiries – and processes that go into generating advice. The financial services landscape is definitely ready to embrace artificial intelligence in 2024 and beyond.”
How has AI been implemented in the advice space in Australia?
AZ: “There are two main areas that stand out. One is content creation, so generating advice documents or letters to clients from quite succinct context. There are quite a few outsourced paraplanning businesses in Australia, as there are in the UK, they are already using AI models to create that type of content.
“Second is in support processes. For example, recordings of client meetings can be uploaded to an AI model that returns a summary, documented file note which would otherwise take a lot of time for an adviser to summarise. That type of thing is already available in the market today, not just in financial advice but in many professional services. AI’s role is currently more around the support and ancillary processes that go into generating the advice rather than the core advice itself. There are very good precedents in the medical field where AI models read MRIs and CAT scans, not for a reliable diagnosis but as another input and a checkpoint for a medical practitioner to use. That’s the next iteration of AI, it can assist in generating advice but it’s not ready to be the sole source.”
Why should advisers in the UK embrace AI?
AZ: “Fundamentally, AI has the potential to make advisers far more efficient. From a pure business perspective, it can help reduce the cost of producing advice, while increasing the capacity to produce advice.
“Both of those things are a big tick from a consumer’s perspective. The advice experience in 2024 is still quite inefficient and there is a lot of room for improvement, for instance in data gathering and onboarding new customers, both of which can be time consuming. There are many areas in which an AI model may be able to radically improve speed and this is something I think advisers everywhere should be embracing.”
Tell us a little bit about what Bravura is doing to encourage innovation in this area?
AZ: “At Bravura, we’re committed to improving long-held and/or inefficient industry processes by introducing new technologies where our clients will get the most value. As part of this, this year we launched a new initiative called Bravathon to challenge our teams – including hundreds of engineers, developers and consultants across the globe – to solve painpoints for our clients through technology.
“The internal competition saw individuals and teams submit more than 150 ideas. These were then voted on by the entire company, with the top 25 ideas being developed into a Proof of Concept and judged by senior leaders in the business for their creativity and impact, with a view to implementation within Bravura’s product set. All of the top three ideas involved the use of AI, so there’s certainly a lot of scope for it to improve most – if not all – areas of the wealth value chain globally.”
What could be the impacts of advisers using AI in their day-to-day practices either positive or negative?
AZ: “AI is good at coming up with ideas, so it can also enhance advisers’ creativity. It is able to write in particular styles so you could tailor your content more quickly and easily to your audience, particularly if you know there is a certain way your client prefers to communicate.
“I can’t really see any negatives except for the learning curve. ChatGPT is the best-known model today, but there are lots of others out there so you could spend an awful lot of time figuring out which ones are productive and never end up with it embedded in your business process. Remember also that AI is not infallible, so you do need to check everything. The buck stops with the adviser, whoever writes or generates the content. It’s an extremely exciting time, but one in which we need to exercise slight caution to ensure we create the right conditions, regulation and industry collaboration to bring the full benefits of AI to advisers and the wealth management sector at large.”
If your business is looking to improve business processes and create better customer experiences, get in touch with our teams today to find out how Bravura’s technology can help.
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